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The problem with government loans is the enormous interest rate you pay. People just can't get ahead unless they refinance which many don't seem to do.
No, the states with income tax on loan forgiveness are Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin.
so yes on California, no on New York.
Ah. The State of New York recently promised deadbeat student loan borrowers that they would not be taxed on their federal loan forgiveness, unlike traditional debt write-offs. I should not be surprised.
The problem with government loans is the enormous interest rate you pay. People just can't get ahead unless they refinance which many don't seem to do.
The problem with any loan is borrowing more than you can pay back.
First, let me state that the student loan that I had was decades ago and I've long since paid it off in full. So this question is not about me or any of my family members.
My question concerns exactly HOW the $10k loan forgiveness will be applied for those who owe more than $10k. Will the forgiveness simply reduce the total amount that they owe and thereby mean that they will pay it off sooner, or will it mean that the government will make their next X number of payments that total $10k?
If the government simply reduces the amount owed but makes no changes to the payment schedule, then there will be no immediate benefit to those who currently owe more than $10k. It will simply mean that at some time in the future, say 3 years for now, they will be able to stop making payments instead of having to keep making payments for another 3 to 5 years.
OTOH, if the government applied the $10k credit to their current payments, then that would mean that the borrowers would not have to make another payment for several years... at which time their payments will resume.
Personally, I think that the first option I listed is the more likely option which means that there will be no IMMEDIATE benefit to those borrowers who owe more than $10k. Any benefit they will get will be several years down the road when the loan is paid off sooner than it would have been had the government not cancelled $10k of their debt.
However, for those who owe $10k or less, the benefit will be immediate since they will NEVER have to make another payment. As I understand it, ALL of the student loan repayments are currently on HOLD due to a previous ruling that suspended all payments due to the Covid crisis.
What a mess the government has created with this student loan situation. I could understand temporarily suspending the requirements for payments for those whose job was adversely affected by the Covid crisis, but that was a relatively small number of people. Most people kept their jobs, and some of those actually SAVED money by being able to work from home instead of having to drive into the office.
It’s the federal government they can’t figure this out. They will probably just mail everyone a check.
Seriously, I thought THAT was the big problem they were focused on tackling instead of coming up with a new way to add another trillion or so in debt.
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